Bloomberg Surveillance TV: August 7th, 2026

Summary

Bloomberg Surveillance TV: August 7th, 2026

Hosts: Jonathan Ferro, Lisa Abramowicz, Annmarie Hordern

Date: August 7, 2026

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Episode Overview

This episode of Bloomberg Surveillance TV offers a comprehensive analysis of the latest developments in global markets, fixed income, and geopolitics, particularly centered around US market dynamics, bond volatility, Japan’s economic trajectory, and escalations in the Middle East impacting global shipping and oil prices. Key segments feature deep dives into market structure with Chris Verrone (Benchmark Strategies), energy and shipping disruptions with Jean Soroka (Executive Director, Port of Los Angeles), and geopolitical tensions with Norman Roll (Former Senior US Intelligence Official).

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Key Discussion Points & Insights

1. US Equity Markets and Bond Yields

[01:42–11:40]

• Market Resilience & Rally Dynamics

  • The S&P 500 continues to rally amidst various global headwinds (bond yields, oil spikes, war).
  • Chris Verrone highlights market breadth: “75% of the S&P is above the 200 day right now. That's about as broad as we've seen in two or plus years.” (02:59)
  • While overall internals are strong, certain sectors like Utilities show weakness, impacted by politics and structural risks.

• Unusually Tight Bond Yield Ranges

  • Verrone notes remarkably stable bond markets: “We're 400 days since Trump 2.0 started…The range of the 10 year yield, 85 basis points. It's the lowest 400 day range in history.” (03:16)
  • Suggests the Administration's goal is to preserve optionality and minimize volatility.

• Sentiment & “Alpha Market” Environment

  • Sentiment is highly bullish, drawing parallels to previous market tops, but Verrone notes: “Sentiment at tops is not very helpful... Panic is a much more actionable emotion than greed.” (05:04)
  • Warns that the free-money, all-boats-rise environment is over: "This is a market where, you know, I think ambiguity is greater than people are used to. I think it's an environment where there's no free lunch. You have to pick stocks." (10:19)

• Comparative Context

  • The macro environment is likened to the 1950s-60s, with more volatility and periodic corrections expected: “It was a decent decade for stocks, but you had multiple corrections, multiple bear markets, multiple economic cycles.” (11:16)

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2. Japan, Yield Dynamics, and Global Competition for Capital

[05:42–11:40]

• Japan’s Shifting Economic Role

  • Japan's long-dormant reflation is resurfacing—Japanese 10-year yields are about to cross German 10-years, indicating significant change: “What's happening in Japan is a massive departure and change from what we've seen from that economy in 30 years.” (07:19)
  • Fears of systemic disruption from rising Japanese yields are “so hyperbole and so misleading.” (06:34)

• Competition for Capital and Treasury Reluctance

  • Jonathan Ferro argues that the era of abundant, cheap capital is ending:
    “There's competition for capital in a way that did not exist 10, 15 years ago. We have to confront that. The treasury does too, and it's obviously a reluctance for them to turn out the debt as well.” (09:22)
  • The Treasury is hesitant to extend debt duration due to nervousness about longer-end demand.

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3. Middle East Tensions and Oil/Shipping Market Impact

[13:54–19:41 & 22:25–28:07]

• Strait of Hormuz Blockade

  • US and Israeli vessels face new restrictions from Iran, leading to oil price surges and global shipping uncertainty.
  • Annmarie Hordern summarizes: "What insurer is going to allow other ships even to want to transit through the Strait of Hormuz? Very, very, very messy situation." (14:23)

• Geopolitical Analysis with Norman Roll

  • Roll is cautiously optimistic for diplomacy, but skeptical about any near-term breakthrough:
    • “The maximalist demands of Tehran and its use of intermittent regional violence is making the conclusion of the agreement unpredictable.” (15:12)
  • On Iran’s “service fee”:
    • “You can call it whatever you wish, but it's a shakedown…and that fee can be changed. Now, Iran is entitled to compensation…But Iran is providing no services. And to be clear, the last time anyone charged a fee in the Strait of Hormuz was April 1622, and that was the Portuguese.” (17:42)
  • Iran’s military capacity is “degraded, but not eliminated.” (19:24) US deterrence is limited, acts are “infrequent” but persistent.

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4. Global Shipping Disruptions and Supply Chains

[22:25–28:07]

• Jean Soroka on the New Normal for Global Shipping

  • The Middle East crisis is consuming “95% of everyone’s time in the supply chain” despite only 10% of cargo volume passing through. (22:57)
  • Prolonged Suez Canal disruptions have forced longer voyages around Africa (up to 21 extra days), with the price of bunker fuel up 60% since February. (23:47)
  • Costs of these alternative routes are significant: “The transit time has increased by two and a half fold. And…fuel burn is about 30 to 35% of the cost of a vessel voyage.” (24:54)

• Living with Supply Shocks

  • Multiple disruptions (COVID, tariffs, and now Red Sea/Hormuz events) have made reliable supply chains a thing of the past; uncertainty is now the norm: “When will we get to a day where there's consistency and if it's a new normal, at least put these policies in place where we can kind of predict what's going to happen?” (25:47)
  • Not all costs can be passed through to end customers; smaller operators face margin pressure: “Most truckers... can’t absorb these price shocks ... and they can't necessarily pass it on because they don't have the leverage." (26:43)

• Labor Market in Logistics

  • Despite these shocks, ports like Los Angeles are running efficiently with “no tightness emerging on the horizon” in labor. (27:52)

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Notable Quotes

• On Market Breadth:
  “75% of the S&P is above the 200 day right now. That's about as broad as we've seen in two or plus years.”
  — Chris Verrone (02:59)

• On Bond Yield Stability:
  “We're 400 days since Trump 2.0 started…The range of the 10 year yield, 85 basis points. It's the lowest 400 day range in history.”
  — Chris Verrone (03:16)

• On Market Sentiment:
  “Sentiment at tops is not very helpful... Panic is a much more actionable emotion than greed.”
  — Chris Verrone (05:04)

• On Japanese Yields Fears:
  “All these calls out there that higher JGB yields are about to blow the world up are so hyperbole and so misleading.”
  — Chris Verrone (06:34)

• On the Alpha Market:
  "This is a market where... ambiguity is greater than people are used to… You have to pick stocks. This is no longer the kind of 15 years of QE and forward guidance that everyone gets trophies."
  — Chris Verrone (10:19)

• On Iran’s “Service Fee”:
  “You can call it whatever you wish, but it's a shakedown… the last time anyone charged a fee in the Strait of Hormuz was April 1622, and that was the Portuguese.”
  — Norman Roll (17:42)

• On Persistent Supply Shocks:
  “The question really is… how much more can we take? ... It’s not consistent. And that's what many of the questions are. When will we get to a day where there's consistency and if it's a new normal, at least put these policies in place where we can kind of predict what's going to happen?”
  — Jean Soroka (25:47)

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Important Timestamps

• 01:42 – Episode Opens, Market Rallies & Internals
• 03:16 – Historic Low in US Bond Yield Range
• 05:04 – Sentiment Indicators and Market Tops
• 07:19 – Japan’s Economic Shift and Global Bond Yields
• 09:22 – Treasury Reluctance and Capital Competition
• 14:15 – Strait of Hormuz Crisis Developments
• 15:12 – Norman Roll on Iranian Negotiations
• 17:42 – The “Service Fee” Debate in Hormuz
• 22:57 – Jean Soroka: Middle East Impact on Shipping
• 23:47 – Red Sea, Suez Canal Disruptions, Route Costs
• 25:47 – Jean Soroka on ‘New Normal’ Supply Chains
• 27:31 – Labor Market in Shipping

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Tone & Takeaway

The episode’s tone is brisk, analytical, and at times skeptical, with hosts probing guests for grounded, actionable insights over sensational narratives. The consensus is that we are witnessing the breakdown of old market and economic certainties — from persistently low yields and cheap capital to reliable global trade routes. Instead, a new era marked by resilience, adaptation, and selective risk-taking is emerging, where deep understanding and nimbleness are key.

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For listeners, this episode offers a nuanced forecast of continued complexity in markets, trade, and geopolitics, highlighting the need to move beyond old playbooks in a rapidly evolving global landscape.

Transcript

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[Bloomberg Audio Studios Announcer]

Bloomberg Audio Studios Podcasts Radio News.

[Jonathan Ferro]

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferro along with Lisa Abramowicz and Annmarie Horden. Join us each day for insight from the best in markets, economics and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from 6 to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always on the Bloomberg Terminal and the Bloomberg Business App. We begin this out with stocks paring modest losses holding their all time highs. Chris Verrone of Bench Strategic is writing with the S&P 500 rallying. With such potency, there's also likely some value in identifying what is not exhibiting similar vigor. Chris joins us now for more. Chris, good morning. Good to see you.

[Chris Verrone]

Great to be here.

[Jonathan Ferro]

What is not exhibiting similar rigor?

[Chris Verrone]

Well, I would say on balance this has been a very good rally, certainly the last week. But just go back the last six, seven, eight weeks. They threw everything they could at this market, whether it was bond yields, whether it was oil, whether it was the war. And the best they could do was maybe a 2 or 3% drawdown in the S and P, extremely rotational tape. You know, we've been observing for weeks and weeks that the internals have been getting better, not worse here. Now there are some pockets of maybe the market that are a little bit squirmy here. The Utilities as an example. I think there's a political crosswind that started to impact a number of those names, particularly on the power producer side. The CGS and the Talons, the Vistas. But I'd say on balance, you know, 75% of the S&P is above the 200 day right now. That's about as broad as we've seen in two or plus years.

[Jonathan Ferro]

Is this bond market close to becoming a problem? Speaking of squirmy, you know, curve in the last week. Go on, give me your thoughts.

[Chris Verrone]

I'm going to tell you something that I think might surprise you here. So we're 400 days since Trump 2.0 started in January of 25. That 400 day period. The range of the 10 year yield, 85 basis points. It's the lowest 400 day range in history. Go back as long as you want. Bond volume is very, very muted right here. Right. I think when you look at what the reaction function from treasury or from the administration has been. It has. Or I think the goal is to limit bond volume, preserve optionality. And when you look at one of the tightest 400 day ranges in history, I think that certainly speaks to that.

[Lisa Abramowicz]

Wouldn't you think though that less communication would introduce more of all.

[Chris Verrone]

So you think so. But the market response has been entirely different thus far. I mean even from the fed last week, 2 year yields are lower, not higher. 30 year yield is flat. Double B corporate spread. You don't talk about Alphabet going to the bond market. Why wouldn't you? Double B corporate spreads are on the tights right now. So I think the things that we look at to kind of gauge the health of the economy, the bond market, the equity market are still pretty much in check. I mean every bank stock around the world is at new highs right now. Credit conditions everywhere are about as benign as it gets. I'm not saying those things can't change. But if you're looking at the landscape today and trying to evaluate in the present moment, are conditions still supportive? I think they are.

[Lisa Abramowicz]

Well, I think that the equity market is telling you that with the fastest kind of whipsaw back to oversold that we've seen in modern history or one of the fastest reversals. Reversals. Bank of America's index says that we're now, the most oversolder over bullish in terms of sentiment going back to 2021. Is that a sell indicator to you the same way that it is to Michael Hartnett?

[Chris Verrone]

I think you need bulls for bull markets. So I'm not as convinced that, you know, when you look at, and, you know, we, we've dived into this for years and years and years, sentiment at tops is not very helpful. It's very helpful at Lowe's, right? Fear and panic is a much more actionable emotion than the greed that's often found at top. So listen, we're very mindful that, you know, as this market has made new highs, you have certainly, I think, seen, seen the attitudes get a little bit spicier here. I would yet to say that we're in that, you know, everyone is completely all in. There's no buyers left. I don't think we're at that at that point yet.

[Annmarie Horden]

When you look at that narrow range on the 10 year and you say that, you know, the reactionary function from the administration is that the reactionary function, that this bond market for this administration still remains the key. It's the biggest check on Trump and the Treasury.

[Chris Verrone]

You know, I think it's interesting, Emory, because you brought up Japan and yen, which I think certainly playing a role in some of this. You go back, look at the last two and a half, three years on the N chart. I mean, it's every time you're in this 160, 162, and I know we pushed 165 a couple of weeks ago, where you get kind of either BOJ or Treasury a little agitated here. And I think the actions of the last week or so certainly reflect that. But I would just make an observation. I think all these calls out there that higher JGB yields are about to blow the world up are so hyperbole and so misleading.

[Jonathan Ferro]

What are people getting wrong?

[Chris Verrone]

I think people are getting wrong that we're in a reflationary boom in Japan for the first time in 30 or

[Jonathan Ferro]

40 years, so freaked out by what's happening.

[Chris Verrone]

I think it drifts with yields in Japan higher. I think it raises the floor on yields around the world. So I understand the adjective there. But as far as Japan, Japanese bank stocks trade great. Japanese and short stocks trade great. So if there was something truly systemic about higher JGB yields, I think it'd be showing up in those avenues. It hasn't.

[Jonathan Ferro]

This sounds like more like a canceling session for the Japanese officials and Scott Best. And then it does people on Wall street because the concern that I've seen at the moment over the last month or so stems from the treasury and stems from Japanese authorities. I haven't actually heard too many people around this table freak out about the situation in Japan.

[Chris Verrone]

You know, I think what's pretty remarkable, and we said it off air, is Japanese tens are about to cross German tens for the first time in a very, very long period of time. I mean, which economy is in better condition right here? I would argue what's happening in Japan is a massive departure and change from what we've seen from that economy in 30 years.

[Lisa Abramowicz]

Part of the problem is that you can talk to the 10 year and how rangebound it's been. The third year has not been rangebound. And this reflationary boom is happening in the backdrop of massive capital raise. We talked about Alphabet and $25 billion of bond sales. I just wonder how much does that constrain some of what the Fed and Treasury can do? Speaking to what John was saying, the concern about the reflationary boom that they're seeing in Japan.

[Chris Verrone]

So nominal GDP is what, six and a half? Where should 30 year yields be with six and a half nominal? I think you could make a very valid case that, you know, 520 is by no means extraordinary. You kind of go back and you look at the kind of great decade of the 1990s. There wasn't a day in the 1990s where the 10 year yield was under 5%. Right. So I just think we have to put this in a little bit of context. I've always been of the view when you look at these kind of bubble like equity environments or melt up like environments, they tend to end with both equities going parabolic and bond yields going parabolic. Think 87. It happened in 89 in Japan. It happened. You had the Nikkei double that year. JGB yields went from 4 to 8 in 99. It happened. The NASDAQ clearly did what it did. But people forget us. 10 year yields in 99 went from 4 to 7. So that's how these typically end. I don't think we're in that explosive bond environment just yet.

[Jonathan Ferro]

Debt to GDP ratios have changed. Yeah, we're running persistent 6% budget deficits even in good times. That's problematic. Clearly the treasury is very uncomfortable about allowing people to monetize their dollar reserves at the moment based on the access the Japanese have been given to a particular vehicle over the Federal Reserve. That would speak not used.

[Chris Verrone]

I believe it hasn't been used. Reports this morning has not been used,

[Jonathan Ferro]

but it speaks to unease of the treasury and some people might say for good reason that these yields are getting away for them at the wrong time when the backdrop for fixed income right now has changed. There are problems in Germany, there are problems in Japan that we didn't have to otherwise confront. And you know, I'm going with this because 15 years ago when we would all sit around this table and people would complain about the deficit and, you know, the supply concerns and a lot of those concerns are misplaced, but the backdrop for fixed income was so different. We had an anchor in Japan, we had an anchor in Germany, and the biggest companies in this country weren't issuing debt in quite the same way. There's competition for capital in a way that did not exist 10, 15 years ago. We have to confront that. The treasury does too, and it's obviously a reluctance for them to turn out the debt as well. So you say this is normal. I don't think the treasury thinks this is normal at all, which is why they won't extend duration at all. And they keep guiding the treasury market to expect the same kind of issuance because they're nervous about what's happening with longer.

[Chris Verrone]

If you look historically, the issuance on the short end is still running below the long term average. And this is, you know, it's really no different than how the Yellen treasury funded the government here as well. I think what's interesting, and we use the term, we're entering the alpha market, right? This is a market where, you know, I think ambiguity is greater than people are used to. I think it's an environment where there's no free lunch. You have to pick stocks. This is no longer the kind of 15 years of QE and forward guidance that everyone gets trophies. So I think it's an important shift and one will have to adjust. There are so many moving pieces here at the moment. You know, in this 10 minute discussion, right, we've talked about treasury yields, we've talked about yen, we've talked about equities. I think you've really got to stay on your toes here. And I, you know, I kind of liken this from the transition from the 50s into the 60s where you had a very docile decade. In the 50s, bond yields got to about five and a half or six in the early part of the 60s, you bounced around for the next six, seven, eight years. It was a decent decade for stocks, but you had multiple corrections, multiple bear markets, multiple economic cycles. I think that's the environment we're in. Think about the equity market this year. It's been all E, not p. E rate. Ps are down straight is up a lot. That's inherently a more cyclical economy. I think it's one that we ought to get used to.

[Jonathan Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

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[Jonathan Ferro]

painful thoughts I I can't stop scratching my downtown. Mm yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud.

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[Chris Verrone]

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[Jonathan Ferro]

Under Savannahs this morning a diplomatic deadlock in Australia for most sort of open right now.

[Chris Verrone]

You know we have a thing called

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the blockade headed up by the US

[Jean Soroka]

Navy and we control it.

[Chris Verrone]

I think we're doing very well.

[Jean Soroka]

I just, you know, I'm involved in the negotiation.

[Chris Verrone]

I think it's going to end pretty soon.

[Lisa Abramowicz]

I don't think they can go much longer.

[Jonathan Ferro]

So here's the latest this morning. The President claiming to have control of the Strait of Hormuz as Iran seeks to block US and Israeli ships from transiting the Critical Waterway.

[Annmarie Horden]

And there was also apparently some attacks as well at the opening of the Strait of Hormuz yesterday, which is why you saw saw oil prices move higher. The fact of the matter is the president said yesterday it is sort of somewhat open. It sounds very much like concepts of a plan. They have an idea of how they can get traffic back through. But the fact of the matter is if Iran is not going to allow US or Israeli ships, what insurer is going to allow other ships even to want to transit through the Strait of Hormuz? Very, very, very messy situation.

[Jonathan Ferro]

To build on that, the former senior US Intelligence official Norman Roll writes the following. The US Iran conflict now has many fronts where violence is intermittent but could flare up with strategic consequences. Norman joins us now for more. Norman, welcome back to the program, sir. How would you characterize this particular agreement? Would you even call it an agreement?

[Norman Roll]

Good morning. Well, we certainly have greater possibility of a diplomatic agreement now than any time in recent weeks. But the maximalist demands of Tehran and its use of intermittent regional violence is making the conclusion of the agreement agreement unpredictable. Likewise, we should note that just execution of this agreement will require treasury to issue rules as to how firms could pay if fees are paid. And if fees are not paid, then we have to prepare for additional violence by Iran in the future. Iranian decision making is not unified on the need for concessions and indeed there is no sign of a concession. A pro concession party in Iran at this point.

[Annmarie Horden]

Norm, how can treasury green light these fees if Iran is not allowing US Vessels to transit?

[Norman Roll]

That's an excellent point. And we should keep in mind it's US Israeli. Could be US Or Israeli related. The definition of that concept could be quite significant. And in essence what Iran is doing is not only keeping the US out, but dictating to Gulf states who can deliver their food, their energy, their trade partners. This would have a significant impact on global commerce. So it can't be conducted. We can't rule out that this is just a negotiating threat by the Iranian Parliament. It doesn't have decision making authority. But there have been examples of Iranian parliament making decisions such as 60% enrichment that have been executed by the government when approved by the support Supreme Leader and the National Security Council.

[Annmarie Horden]

Norm, there have been some Gulf countries that have been able to get oil and other products out, namely the uae. How have they been able to do this?

[Norman Roll]

Most of the Gulf countries that use the Strait of Hormuz have exported oil in recent weeks. They've done it quietly through the Oman channel in close coordination with the US military and obviously the government of of Oman. But Iran has intermittent, intermittently used its degraded missile and drone capability to demonstrate that it has a capacity to strike some of this shipping. And that capacity has the greatest impact on lng, which has essentially been shut down in the Gulf norm.

[Lisa Abramowicz]

We've heard about a toll being unacceptable not only to the US but other Gulf countries that are neighboring Iran. Is a Service fee acceptable? 5 to 7% Service fee is currently being proposed by Iran?

[Norman Roll]

Certainly not. You can call it whatever you wish, but it's a shakedown and that fee can be changed. Now, Iran is entitled to compensation or to charge. It were to take care of a pollution issue, a security issue, rescue a ship in danger. That's not unreasonable that any country would ask for that. But Iran is providing no services. And to be clear, the last time anyone charged a fee in the Strait of Hormuz was April 1622, and that was the Portuguese.

[Lisa Abramowicz]

How do you see this evolving given the fact that it seems like President Trump has some reluctance to engaging in kinetic warfare? Again, there's been discourse about whether that's tied to the munitions stockpiles. Questions around whether anything additional can be accomplished with airstrikes that hasn't already been accomplished. What do you see as a potential path of travel? Should these negotiations not yield anything?

[Norman Roll]

Time tenacity by the diplomats and the intermediaries. The United States is certainly pursuing a diplomatic route along with the Gulf parties. But events may shape that into a different direction. The Houthi attack on Saudi Arabia. We'll have to see if the Saudis follow through with retaliation. The reported attack that took place yesterday on shipping and you will be US retaliate if we don't. Iran will continue these attacks and it's not sure that diplomacy will succeed. But at the same time, the diplomatic path forward will require concessions from Iran. If that doesn't occur, we're in a new normal.

[Annmarie Horden]

Where has the US Set deterrence then? Because the IRGC is still going after vessels through the Strait of Hormuz and at the same time the Houthis are now involved.

[Norman Roll]

Well, that is true, but the nature of the attacks are limited. They're infrequent. They're usually singular. They're not involving saturation strikes. There is no question that Iran's military capacity has been significantly degraded. But degraded does not mean eliminated. And that's really the question.

[Jonathan Ferro]

Stay with us. More Bloomberg surveillance coming up after this.

[Chris Verrone]

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[Jonathan Ferro]

Let's talk about a messy process developing in the Middle East. Iran seeking to prevent US and Israeli ships from entering the Stratiformus. A potential deal with Amman could grant Tehran tighter control of the waterway the Port of Los Angeles is Executive Director Jean Soroka writing? Regional instability continues to affect global shipping by increasing fuel and transportation expenses. Those high costs ripple through the economy, ultimately affecting businesses and consumers alike. Jane, I'm pleased to say is with us here in New York. Jen, good morning. Good to see you.

[Jean Soroka]

Good to see you John.

[Jonathan Ferro]

How is that instability changed your world in the last five months?

[Jean Soroka]

It's been really unbelievable because while there's about 10% of worldwide cargo that goes in and out of the Middle east, it's taking up 95% of everyone's time in the supply chain. New base cases on prices of energy. New base cases on how waterborne deployment architecture is going to look on these big ships and where they're going and how we're going to handle the cargo. Case in point was this summer you saw a lot of small to middle sized importers bringing in their cargo earlier because the fuel prices were going to go up. They lagged by about three months in the industry and you had a target date of those tariffs. The section 122 is going offline on July 24th. So we saw an abnormal rise in cargo May, June, July ahead of a traditional peak season.

[Jonathan Ferro]

And we got problems in the Red Sea now as well.

[Jean Soroka]

Four years now, John. The the Suez Canal receipts are down 80% on average, which means the shipping lines take a longer route around the Cape of Good Hope of Africa adding further 14 to 17, maybe even 21 days longer on transit time. Now with the price of bunker fuel up 60% since February 28, that means the spend on each one of those vessel voyages is so much higher.

[Annmarie Horden]

Are vessels and shipping companies just prepared to live through this? As you said, four years you've been doing the Red Sea. Are they prepared to live through the Strait of Hormuz? That's off and on like a light switch.

[Jean Soroka]

Yeah, I don't think anybody is sitting back. Anne Marie San, you know, this is just the way it's going to be. But the amount of time that's being invested in scenario analysis, whether it's the importer Exporter, shipping line 3 PL Logistics Company has just been off the charts. What do I do if this happens? There are so many announcements once again emanating out of Washington. This whipsaw effect of information has got people just planning as much as they can and then executing to the best,

[Chris Verrone]

best of their ability.

[Annmarie Horden]

How expensive is it to take these routes?

[Jean Soroka]

These routes add so much time and the fuel burn at these elevated levels you're talking about prices that are up 60% over the last six months on average. The transit time has increased by two and a half fold. And right now the fuel burn is about 30 to 35% of the cost of a vessel voyage. One ship sailing 30, 35% is what you're looking at on the energy price.

[Lisa Abramowicz]

What I'm struck by is how we've had one supply shock after another and people keep saying well at first it was transitory, the second one it was just inconvenient. That one shock came after another and now people are saying this is the new normal, that a lot of the old rules are breaking down, the sort of free traverse of the seas kind of dissipating. How do your clients think about these supply supply side shocks when it comes to the influence over their prices and how they plan for the future?

[Jean Soroka]

The question really is to that how much more can we take? We go through Covid, we had 109 ships backed up in L A and long beach because people were buying so much product and then sitting on it like a warehouse complex at the Port of Los Angeles. Then we go through the tariff policies and the reaction from overseas markets where we're now out of the ag sector. Soybeans moving out of Brazil, Argentina, almonds from Australia and then import shifting with windows of opportunity and folks just speeding product to market. So it's not consistent. And that's what many of the questions are. When will we get to a day where there's consistency and if it's a new normal, at least put these policies in place where we can kind of predict what's going to happen?

[Lisa Abramowicz]

Well, I guess if it's the new normal to some degree or as people change, struggle to keep up, can they just raise prices? Is that a lever that they can keep leaning on to offset the extra costs incurred by the inefficiencies and the disruptions?

[Jean Soroka]

Not always. And I'll give you one example. With the price of energy across the board going up, diesel prices in Southern California are up by about a third. Most of the truckers that do our business at the port, about two thirds of all the cargo moves in and out over the road. They're small to mid size sized businesses. They can't absorb these price shocks like others can and they can't necessarily pass it on because they don't have the leverage. So there are different segments in this, the retailer passing it on, absorbing, finding efficiencies in their supply chain. Better chance than some of these service providers that are really doing the business every day. Our first and last mile ambassadors.

[Jonathan Ferro]

Jen, just final question. It's payrolls Friday, so we talk about the jobs data. What's the labor market movement look like in your industry at the moment? Are things getting tighter? What's access to talent shaping up like?

[Jean Soroka]

Generally speaking, we're in pretty good shape. These dock workers, the best in the business, moving all this cargo. Our daily stats have never looked better from an efficiency standpoint. How much cargo is moving it out. Even with the changes in commercial driver's license and truckers, we're still in very good shape for the 17,000 that are registered to do business.

[Jonathan Ferro]

No tightness emerging on the horizon?

[Jean Soroka]

Not that I've seen, no. But even at elevated levels, you got to do better with your gate appointments. You got to make sure that you're loading these trains on dock quickly and moving them through the Alameda corridor. It's all about speed and efficiency, and so far we're staying ahead of the curve on that.

[Jonathan Ferro]

This is the Bloomberg Surveillance Podcast, bringing you the best in markets, economics and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from 6am to 9am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen. And as always, on the Bloomberg Terminal and the Bloomberg Business App.

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